Anti-trust actions over changing technology do not benefit anyone

NET RESULTS:Decisions in anti-trust cases against technology companies can be 'so last century', writes KARLIN LILLINGTON

FOR APPLE, while one hand giveth, the other potentially taketh away.

In the same week that the company announced it had already sold one million iPads just four weeks after the touchscreen tablet device’s launch – more than twice the take-up the iPhone had after its launch – rumours were circulating that the company might be the target of a US anti-trust inquiry.

The iPad news comes in the wake of excellent quarterly results for Apple which show some serious growth in its Mac computer line as well as in iPhone sales.

If iPad sales continue at such a rate (and indications are that they will, given the boost they will get from the recent US launch of the 3G version and the pending launch of the device worldwide), then they will greatly surpass many analysts’ expectations.

All very nice for Apple, but an anti-trust threat must be a serious headache to the Cupertino company. Not because of whatever the findings may be at the end of the process but because of the tedium, uncertainty and, many would argue, pointlessness of the process itself.

The anti-trust concerns apparently focus on Apple’s decision to require developers to use its own Cocoa tools to build applications for the iPhone, iPod Touch and iPad. The development of apps is a major market in its own right (an area Apple pioneered). Most developers, even if they are developing apps for other platforms like Google Android-based handsets, will want to have a version on the Apple platform as well.

Until recently, developers could build Apple apps in a number of different ways, using different tools, but all new apps need to be built using Apple tools.

Apple’s well-publicised shut-out of Flash is another argument that the company is locking out non-Apple technologies and producing a “closed” system.

Apple chief executive Steve Jobs posted a letter to Apple’s website last week in which he explained his stance on the Flash issue. He argues that it is Flash which produces a closed system for Adobe, rather than Apple creating the problem.

Supporters of Apple’s take note that video can be rendered on Apple devices using the open industry standard HTML5, but critics note that Flash is a widely used standard and barring it on Apple devices closes down much web-based video.

It is probably the tools issue that will get more anti-trust scrutiny, however. Developers, like the rest of us, do not like having to reinvent the wheel. Many will be exasperated that they have to build one version of an app for Apple devices and other versions for other devices.

Or will they? I spoke to developers for a feature story a few weeks ago and every single one already identified this as an issue anyway.

There were concerns, for example, that there were already indications that Google’s android platform was “forking” – dividing into two slightly different platforms – which could require developers to create two different apps for essentially the same platform.

What is happening is not dissimilar to the headache that web developers face every day. Internet users access the net with a variety of different web browsers and some of those browsers do not use industry standards, forcing developers to create multiple versions of their web services and applications.

The big question is whether Apple’s move would actually constitute an anti-trust violation. Some think not. Requiring that proprietary tools be used for creating applications is not the same as, say, controlling or leveraging in an entire operating system or platform, locking out competition.

Microsoft was the target of a long anti-trust suit in the US on the basis that its dominance in the operating system market meant it could unfairly use its platform to gain control in other emerging market segments, such as for web browsers.

The Microsoft action is a cautionary tale,though. The suit dragged on for so long that the actions finally taken were inconsequential, and Microsoft is no longer anything like the arrogant titan it was seen to be in the 1990s when that suit began.

The US justice department’s Christine Varney told a conference in 2008 that “Microsoft was so last century” as an anti-trust concern – that time had passed, the markets had changed and the perceived threat over. Now, she said, her concern was more with Google.

Really? I would argue that anti-trust actions against technology companies – by the US, the EU or any government – are all generally “so last century”.

Anti-trust prosecutions may have made sense in the 1930s, when life was slower and companies and markets more static. In today’s lightning-fast tech world, however, by the time a decision is reached and a punishment devised, it is likely, as with Microsoft, to be all but meaningless.

Technologies and markets change too quickly for such clumsy legislation. In the technology ecosystem, new challengers can rise out of nowhere, causing the mighty to fall, or at least diminish – as Varney herself notes that Google has done in the case of Microsoft – and as other newcomers will do to Google.

Meanwhile, anti-trust prosecutions do not seem to benefit anybody. They divert vast financial resources within companies that would otherwise be focusing on innovating.

They hurt the ecosystem of smaller companies that surround the large company. They damage shareholder value. They can skew the market artificially. Ultimately – as with the US Microsoft suit and the ongoing EU quibbles with the company – consumers and the market may benefit little or not at all.

At the end of the day, there is something wrong with government processes that fiddle over web browsers, tech platforms and application tools while the entire bank and economic system burns.

Let’s let the technology companies get on with it and put some value back into economies destroyed by those old-world business sectors.

Blog: Techno-culture.com

Twitter: Twitter.com/klillington